Someone doesn't understand EROEI

[Ralph]

The writer of this article just doesn't understand the difference in the EROEI of the oil resources in Norway and Canada and the different levels of profit that this brings.

There is no "profit" in Energy Returned On Energy Invested.

[Tarrel]

The writer of this article just doesn't understand the difference in the EROEI of the oil resources in Norway and Canada and the different levels of profit that this brings.

There is no "profit" in Energy Returned On Energy Invested.

Surely that's not true, is it? A source of energy with a low EROEI will require higher energy inputs in order to recover a given quantity of energy. This energy input, and the equipment, etc, that uses it, all has to be paid for, pushing up costs and reducing profit per BOE extracted.

[RenewableCandy]

rgr used to go on about this ad nauseum. But if the energy you use in the extraction process is cheap and readily available, and the extracted stuff is sold at a premium because it's more versatile (e.g. use gas to extract oil), then eroei and profit are kind of decoupled.

Erm I haven't read the initial link so I don't know if that's relevant here.

[kenneal - lagger]

Erm I haven't read the initial link so I don't know if that's relevant here.

The writer was complaining that the Norwegians get 70% of the profits of their oil while Canada gets nothing and Alberta gets only 12% from the tar sands. He was also complaining that Canada has massive debts while Norway has a huge surplus. The difference in EROEI means that there is a lot more profit to be taxed in Norway than in Canada. If EROEI includes all the energy inputs in the plant and labour of tar sands extraction then it is a valid comparator. Norwegian oil would be profitable at a much lower price per barrel than tar sands oil so they are able to tax it more heavily.

[Ralph]

The writer of this article just doesn't understand the difference in the EROEI of the oil resources in Norway and Canada and the different levels of profit that this brings.

There is no "profit" in Energy Returned On Energy Invested.

Surely that's not true, is it?

I certainly didn't write the definition, but if those who did wanted it to be Profit Returned On Enrgy Invested, they really should have said so.

[vtsnowedin]

There is no "profit" in Energy Returned On Energy Invested.

Surely that's not true, is it?

I certainly didn't write the definition, but if those who did wanted it to be Profit Returned On Enrgy Invested, they really should have said so.

Is not the 'energy returned' and available for sale at current market prices the source of any profit realized from the energy "invested' which has to be written off at the current market price of that energy source. ?
You could ,say use coal at $50 per ton times 100,000 tons to provide the electric power to drill a well for a cost of $5,000,000 and that well could?? produce 100,000 barrels of oil worth $100/ barrel totaling $10,000,000 For a "profit" of $5,000,000.
Energy in hand is "Profit" after the bills accrued getting it "in hand" or F.O.B. have been paid.

[kenneal - lagger]

There is no "profit" in Energy Returned On Energy Invested.

Surely that's not true, is it?

I certainly didn't write the definition, but if those who did wanted it to be Profit Returned On Enrgy Invested, they really should have said so.

What the ***k do you think they do with the energy that is returned on the investment? Bath in it? I thought you were in the oil business.

If you get a low energy return on your energy invested you haven't got much energy to sell or tax, as the Canadians are finding out!!

[woodburner]

If you get a low energy return on your energy invested you haven't got much energy to sell or tax, as the Canadians are finding out!!

The solution in their case appears to be "dig a bigger hole".

[Ralph]

I certainly didn't write the definition, but if those who did wanted it to be Profit Returned On Enrgy Invested, they really should have said so.

Is not the 'energy returned' and available for sale at current market prices the source of any profit realized from the energy "invested' which has to be written off at the current market price of that energy source. ?

I really don't know. It seems like if that was what EROEI was SUPPOSED to mean it would really be called INTERAAFSACMPTSOAPRFTEIWHTBWOATCMPOTES which is what you just said. If someone thought that shortening it to EROEI would solve the confusion, why they only chose to use the word "energy" in there rather than anything to do with price is beyond me.

Energy in hand is "Profit" after the bills accrued getting it "in hand" or F.O.B. have been paid.

You instant you get away from the beauty of "energy"this equating with "energy" that and allow the concept of "value", "profit", "supply", "demand", "market" into the room, you just dumped the thermodynamic properties of the concept and walked right into economics. And we all know where that leads.

[Ralph]

If you get a low energy return on your energy invested you haven't got much energy to sell or tax, as the Canadians are finding out!!

I'm not sure what the Canadians and the millions of barrels a day of chemical feedstock they are mining have to do with EROEI? Certainly EROEI doesn't seem to only refer to those kinds of mining operations, certainly EROEI doesn't say anything about taxes, or profit, or what the market does or doesn't do.

But economics....well....that might cover ALL the concept of how Canadians take a mining operation and make money off of it. But that isn't a "about energy" concept, but a "about money" one.

And then here come those bloody economists.

[Ralph]

If you get a low energy return on your energy invested you haven't got much energy to sell or tax, as the Canadians are finding out!!

I'm not sure what the Canadians and the millions of barrels a day of chemical feedstock they are mining have to do with EROEI? Certainly EROEI doesn't seem to only refer to those kinds of mining operations, certainly EROEI doesn't say anything about taxes, or profit, or what the market does or doesn't do.

But economics....well....that might cover ALL the concept of how Canadians take a mining operation and make money off of it. But that isn't a "about energy" concept, but a "about money" one.

Damn economists will then show up and go all crazy on elasticities and substitution and conservation and in about 10 shakes of a lamb's tail everyone will be so confused no one will even remember to shout "peak!" at them in the hopes of changing the topic.

[kenneal - lagger]

..............

I'm not sure what the Canadians and the millions of barrels a day of chemical feedstock they are mining have to do with EROEI? ...........

???

Must be a troll. I don't like using that term but this answer makes you wonder if "Ralph", whoever it might be, has read any of the thread above or, indeed, if they have any understanding of the thread above!!

[biffvernon]

Yep, shades of RGR.

[JavaScriptDonkey]

Although if what you are mining with fossil fuels is viewed as feed stock for production rather than as fuel itself his argument does make sense.

EROEI is useful but doesn't tell the whole story. Obviously if we have to burn 2 barrels of expensive and rare oil to get 1 barrel of expensive and rare oil then we are on to a loser.
However, if the energy input is cheap and abundant gas yet the energy out is expensive and rare oil then it changes the equation.

[clv101]

However, if the energy input is cheap and abundant gas yet the energy out is expensive and rare oil then it changes the equation.

Indeed, akin to manufacturing Duracell batteries. A useful and profitable process - but lets not be kidding ourselves we can run the world on Duracells.